By Peter Costa

There is no doubt that we are in a deflationary period. With unemployment numbers well over 168,000 for this year alone, individuals are finding themselves scrounging for money. It seems like everyone has their eye on the stock market in hopes that if it starts to climb it may be a sign that we are moving past this deflationary period. As much as we would love to move out of this less ideal period what is going to follow is far worse. It is pretty factual to say that what is coming after this deflationary period is unprecedented inflation. I do not make this comment out of thin air I make this out of immutable fact. If anyone were to take a close look at the banking crisis, they would come up with the same conclusion.

Since September 2008 the printing press has been turned on 24/7 churning out as much money as it can possibly spit out. With the $1.75 trillion mortgage crisis starting off everything it has now snow balled into atrocious levels. Since the mortgage crisis has unfolded we have seen countless multi-billion dollar corporations filing for bankruptcy or even worse seeking bailout packages. We have seen a $787 billion stimulus package pass among many other attempts to salvage the falling pieces of the American economy.

Where does that leave us today? With our entire banking system on the verge of complete financial meltdown, that is where. At the beginning of 2009 the FDIC insurance fund had over $52 billion in assets. By the end of March this year they were shown to have $13 billion left. Over 60 banks have declared bankruptcy across the nation since March bringing the overall number this year to 81 bank failures. Included in this number are two of the largest bank failures in U.S. history which are Colonial and Guaranty. On August 14, 2009 Colonial Bank filed for bankruptcy with over $20 billion in assets making them the 6th largest bank failure in U.S history. The following Friday Guaranty Financial followed suite and closed their doors with over $13 billion in assets making them the 10th largest bank failure in U.S. history. The failure of Colonial and Guaranty has abducted over half of the $13 billion remaining with FDIC and come end of August we could see the entire fund dry up, or even worse FDIC declaring bankruptcy.

Currently Citigroup is being audited by Neil Barofsky the inspector general for TARP and could face a similar situation as Colonial and Guaranty if they do not get their books straight. In addition to the audit on Citigroup over 35 ongoing criminal and civil investigations of suspected account, securities and mortgage fraud is taking place for various banks across the nation. I think it is safe to say that we may see the current number of bank failures escalade by the end of the year. With the fiscal year end for the government coming up in September the economy is really going to start feeling the strain of everything.

Where is all of this leading us to? Long term recovery for the U.S. economy and more importantly massive inflation. For 2009 the deficit will total over $1.8 trillion, about 4 times the record set last year. The last largest deficit was 6% of GDP and we are currently at 13% of GDP for 2009. They have done a great job of deterring inflation but we all know it will have to surface sometime. There is no possible way they could be pumping as much money as they have into the system and not have repercussions. As Neil Barofsky has said the government bailout programs are not a black hole and everything has its breaking point. Ronald Fricke president of Regal Assets stated last week that globally countries are steering away from the U.S. dollar and this is forcing the Federal Reserve to produce the needed money for bailouts which will ultimately lead to inflation.

The time is nearing where all Americans will have to start paying for the financial catastrophe taking place in the form of inflation. We all need to start thinking like David Einhorn and John Paulson two of the most successful hedge fund managers in the nation. Like China they have been pouring their assets into commodities more importantly gold. If you are a larger institution or a house hold investor you owe to yourself to start hedging against the inevitable.

By Peter Costa

The economy is increasingly growing worse and continual bailout situations keep coming to surface. One of the biggest strains on the US economy right now is the banks and how financially solid they actually are. In lieu of this situation stress tests were conducted recently on all the banks in the nation. Since the results have been revealed scores of banks have been declaring bankruptcy all across the nation.

There are currently 64 banks and counting who have filed for bankruptcy in the last few months which has cost FDIC over $39 billion. With this recent news FDIC insurance fund is becoming broke and is projected to be completely out of funds by the end of August, 2009. This is just the tip of the iceberg and we are about to see things become a lot worse.

Two of the nation’s largest banks Citigroup and Bank of America are in a lot of financial trouble. According to Citigroup they reported a second quarterly profit of $4.3 billion which seems to be a glimmer of hope for recovery. There couldn’t be anything further from the truth. Included in their quarterly report was the one time sale of Smith Barney for $6.7 billion. If you were to exclude this one time event Citigroup is really at a loss of $3.4 billion. In fact once the stress tests results came back Citigroup was in need of an immediate $3 billion to stay afloat. Thank goodness they were able to procure this loan but it came at a price of 13% annually! If that wasn’t bad enough they now need to come up with an additional $1 billion by August.15, 2009 or they will face possible bankruptcy. The situation is such a strain on FDIC that Goldman Sachs and JP Morgan have been appointed by the government to come up with a rescue package. Bank of America is in a similar situation showing a profit of $2.42 billion but included in the gain is the one time sale of China Construction shares for $5.3 billion. If this one time sale didn’t take place they would be in a similar situation as Citigroup.

Neil Barofsky, the inspector general for the Troubled Asset Relief Program, has said the bailouts, bank rescues and other economic lifelines could end up costing the federal government as much as 23.7 trillion. This number is more then the cost of all the wars the US has ever fought combined and is the most that has ever been spent on a single effort in American history which amounts to $80,000 for every US citizen. If this catastrophe continues there is a growing risk of a bank holiday similar to what was imposed by FDR in 1933 where banks closed and account holders were not able to access their funds until the holiday concluded.

Only time will tell where this economy is heading next but for the savvy individual the time to protect your wealth is now. Precious metals have been a proven hedge against economic turmoil but more importantly inflation. If you do not own gold or silver you should start looking into it. For some of the most affordable prices on precious metals visit RegalAssets.com and start preserving your wealth.

By Peter Costa

With such an enormous decline in the global economy I can’t help but notice the consistent growth occurring in China.

China has expanded at an astounding rate of 7.9% announced recently by the government and has inflation down 1.1% from a year ago. According to many news publications China is very worried about emerging inflation in the global economy but more importantly the United States. With over $2.13 trillion dollars of foreign reserves at least $763 billion is pure US debt.

How is China combating the plummeting US economy more importantly the devaluation of our currency? Well let’s take a look… Since 2003 China has picked up 600 tons of gold without telling anyone and has grown their reserves 75% since then. With the IMF frantically selling gold off into the global economy China has recently purposed to purchase the whole 403 metric tons they plan to sell this time around. In addition China has expressed its interest in purchasing $80 billion in gold which amounts to about 2600 tons of gold. With the IMF being one of the largest holders of gold, China and India have teamed up and publicly pressed the IMF to sell its entire 3200 ton reserve. From 2002 to 2009 China has added over 1,054 tons of gold to its already plentiful reserve and will be rapidly expanding that number in the coming times.

Is this increasing gold reserve a reaction to the current state of the US currency? Li Lianzhong, head of the economic bureau of the Communist Party of China Central Committee’s Policy Research Center, came in a statement recently saying ‘Should we buy gold or US Treasuries?’ he asked, ‘The US is printing dollars on a massive scale, and in view of that trend, according to the laws of economics, there is no doubt that the dollar will fall. So gold should be a better choice.’ With China shying away from the US currency we can expect a global chain reaction. Ronald Fricke president of Regal Assets says ‘With the IMF stating recently that the outlook for the US is even bleaker then the world as a whole we can guarantee that US Treasuries won’t be a popular purchase in the global economy for awhile’

China is diversifying outside of the US currency and has recently provided $45 billion to Russia, Brazil, Venezuela and Kazakhstan in exchange for long-term crude supply deals. With such a plentiful amount of currency in circulation what is China purposing next? At the recent G-20 summit in London China was calling for a gold linked currency to replace the dominant dollar and become the new world’s reserve currency. With such bold moves and propositions it really makes one think is China really becoming the next global superpower? Truly only time will tell but in the meantime we should all be learning from China and should purchase some gold of our own. If you are a savvy investor or just someone looking to preserve what money you have make sure you visit RegalAssets.com to get the best prices in precious metals.

By Peter Costa

California has hit such a financial hole that expected tax refunds this year will come in the form of an IOU. Why are you getting an IOU instead of cash? Well that it is because lawmakers have not been able to close a $26.3 billion dollar deficit. Duh. Thanks a lot Terminator you have really done California justice this time around. I wonder if we could pay the Terminator in IOU’s for the outstanding job he has been doing…

The states controlling office has already issued over 137,000 IOUs that add up to $640 million. How tragic is that? We already have a dollar that is steadily declining and backed by absolutely nothing and now we are going to receive a promise to be paid this declining piece of paper? But wait it gets better, apparently the IOU comes with an enticing 3.75% annual rate by Oct.2. After you factor in inflation the 3.75% will really turn into a big kick to the groin.

Can’t wait to cash in on the IOU? No problem! Craigslist will help you out with this problem. Ads have been popping up all over Craigslist offering anywhere from 60 to 95 cent on the dollar. Sounds like a fool proof plan, exploit desperate individuals for their well deserved tax refunds. Is it just me or does this seems like some sick twisted joke? What is next? Redeemable gift cards at your favorite restaurant for work wages?

By Stephanie Quach

Let’s try to be positive about GM’s bankruptcy. There aren’t much great things about it obviously, but still, we’ll make an attempt.

According to GM, their market share in 5 years will remain at 19%. Well, better to remain the same than lose more. The Cadillac CTS won the award of 2008 Motor Trend Car of the Year. Looks like boxy, Mercedes-look alike cars are in. If you can’t afford a real German Mercedes, buy a Cadillac for less than half the price!

Imagine going to Budget to rent a car. Who would jump for joy when you get a gas-guzzling Pontiac instead of a Honda Accord? Although it is important to be patriotic and buy American cars, the fact is that American cars break down more than Japanese cars. The fact is that American cars cannot beat its Japanese rivals and German rivals. Sure, American cars are cheaper than their rivals’ but eventually cost more because all those repair bills at the auto shop add up. No wonder customers are willing to pay $2000-$3000 more to get a better quality Japanese car. GM needs to improve on the quality of its cars. Do what China and Japan did in the past. Buy Japanese and German cars, get your engineers to open them and learn how to create better quality cars. Or as Ronald Fricke president of Regal Assets as recently stated buy the company, like China has with Hummer.

Global insight predicts that GM will start becoming profitable next year and very profitable by 2014. After cutting out the Hummer, Pontiac, Saab and Saturn brands, and one third of its workers, GM will be able to cut costs as well as focus on what is left of it, if anything is left…

By Stephanie Quach

Your house is still unsold. You’ve lost your job. Your stocks fell. Your greenback is worth less. What on earth is going on? Is the world turning upside down? Are we doomed for the next great depression?

Who is in control? The guy in the cartoon, Ben Barnanke, will hopefully save us, and not screw us over. Don’t feel too bad. His own home, a 2600 square foot house on Capitol Hill was reported to be down $260,000 in value last March, and is probably down even more now. That gives him more motivation to save the economy. According to Ronald Fricke president of Regal Assets there are over 50,000 homes in the United States that are empty because their value dropped so much and people couldn’t afford to pay the over inflated mortgage.

Bernanke’s solution to the problem: restore fiscal balance. Fiscal policy, unlike monetary policy, involves adjusting government spending and taxes to influence the economy. All those bailout plans, an assortment of stimulus packages, lending programs, contribute towards out $11 trillion debt.

The Treasury Department raises funds through selling bonds. However, the yield on government bonds has been rising, reaching the highest point in 5 months. But the higher the yield of the bond, the riskier the bond is. Junk bonds typically have the highest yields but nobody wants them because their chances of default are extremely high. Treasury bonds are nowhere as rotten as junk bonds, but they are definitely becoming riskier than before. At the same time, it will be costlier for the government to raise money because of the higher interest rates. This means, they will just have to sell even more bonds to pay back the old ones, resulting in a vicious cycle.

To top it off, Bernanke predicts that recovery will be slow. And even after economic growth resumes, firms will still be cautious about hiring and unemployment will continue to rise for some time. Hopefully, things will work out better than his prediction. If you want to properly hedge yourself against the coming economic times make sure you visit RegalAssets.com and start putting your money in gold.

By Stephanie Quach

Here’s a piece of good news finally. Gold may target $1250 an ounce, says Standard Bank, observing a head-and-shoulders pattern that might be emerging. A head-and-shoulders pattern has nothing to do with dandruff-control-shampoo, rather it is when commodities hit three consecutive peaks, with the “head” being the highest” and the other 2 “shoulders” being lower than the head.

Gold’s record high was $1032.70 on March 17, 2008. Will gold this be that? Right now gold is at $949.38 per ounce. Hold on to your gold as we wait and see what happens. If you don’t have any gold visit RegalAssets.com and start turning your money into gold today!c

By Stephanie Quach

Zimbabwe’s inflation rates: 66,212.3% in 2007, 231,000,000% in 2008. Horrible. Inflation is so bad that you might as well use the Zimbabwe dollar to burn as fuel for cooking. And guess what? The U.S. is following this wonderful role model, according to Dr Marc Faber, owner of Gloom Doom Boom, a famous economist and public speaker.

As if inflation was not bad enough, the U.S. will soon enter hyperinflation, because the Fed refuses to raise interest rates. With a huge growing debt, interest rates being stuck near zero, and skyrocketing unemployment beyond 9%, inflation will start to climb. Inflation is expected to rise to 2.5% in 2011, which is way above the targeted range of 1.7% to 2%. The Federal Reserve and the central bank model is a faulty system that has devalued the buying power of the U.S. currency more then 95% since its inception says Ronald Fricke president of Regal Assets.

Rather than follow Zimbabwe’s footsteps, it is better to follow what Faber is doing. Firstly, he is buying Asian stocks instead of US government bonds because he believes that Asia will outperform the rest of the world. Secondly and most importantly, he is adding more gold to his current gold investments. He had previously bought gold when it was less than $300 an ounce, and hit over $1000 last year. Currently it is $949.85 an ounce, over a threefold increase. So even if the U.S. were to follow Zimbabwe’s track, Faber won’t be greatly affected because he has already bought gold which is a hedge against inflation and hyperinflation. Follow Faber’s lead and visit RegalAssets.com so you can start putting your money into gold and hedge against the coming times.

By Stephanie Quach

Do you want your cash to be worth less? Do you want to go overseas on vacation, only to find that everything costs more than it did before? No. Nobody wants inflation. Nobody likes inflation. Who does? Economists Gregory Mankiw, former White House adviser, and Kenneth Rogoff, who was chief economist at the IMF want inflation to happen. Why? They argue that debt-strapped consumers and governments will find it easier to pay back their debts, and this will also encourage Americans to spend more money now before prices go up.

Let’s have some numbers to make this picture clearer of exactly how much inflation is being targeted at. “I’m advocating 6 percent inflation for at least a couple of years,” says Rogoff, a professor at Harvard University. This means that the dollar is going to get significantly weaker. Ronald Fricke president of Regal Assets says that our current inflation rate in the United States is realistically sitting at 8.2% and is going to grow significantly in the coming times. The challenge will be to prevent inflation from tipping over 10%, which prevailed in the 1970s and took almost a decade to recover. At the same time, the Fed is focusing on preventing deflation. Deflation will make debts harder to repay and consumer spending will go down.

Let’s summarize this situation. Firstly, let’s look at the benefits of inflation. Most importantly, debts will be easier to pay off. (Budget deficit is forecasted to hit $1.84 trillion this fiscal year. Higher inflations also means higher interest rates, so the Fed will not have to be concerned of hitting zero percent interest rates. On the flip side, creditors will suffer from losses, especially China. Our dollar will be worth less, translating to our dollar savings decreasing in value,, except for gold. Your gold savings are likely to maintain their value and not be dragged down this inflation turmoil with the greenback. Do yourself a favor visit RegalAssets.com and start putting your money in tangible gold.

By Stephanie Quach

According to The Financial Chronicle (India), “India and China may press for the sale of the entire gold reserves of the International Monetary Fund (IMF) to raise money for the least developed countries. The IMF holds 103.4 million ounces (3,217 tons) of gold that, if sold, can fetch about $100 billion.” Are we in such a bad state that the IMF’s only precious asset is gold? Does the IMF not feel that the greenback is worthy? Looks like even the IMF knows that gold is the only asset that has value to and is stable.

Why is the IMF selling gold? According to “an official,” “[the IMF] is working on a more ambitious proposal of selling the entire gold off, as it is an idle asset with the IMF.” Idle asset? Wow. Gold is not some worthless idle assets. In fact, it is the most amazing idle assets ever because it sits in the vault and just becomes more valuable over the years, as it price keeps going higher and higher. It is like a bank account that never stops to accrue interest, and of course, with better rates than what you get now. Currently, Bank of America offers a mere 0.2% interest rate for a savings account. That means that if you deposit $100 in your account, you only make 20 cents a year. What can you do with 20 cents? It is not even enough to buy a gumball from one of those machines you see in the mall.

The money that will be obtained from selling the gold is supposed to be use to “tackle poverty in the poorest nations.” India and China, are looking at ways to spend this money, namely to improve the IMF’s liquidity, or to improve the incomes of the poorest countries, or some sort of combination of both. What irony. So the US wants to sell China some gold, and take even more dough from China. And this is called helping China’s poor? We have sold them millions of bonds, which we are unable to pay back. Maybe the Chinese got sick of our bonds, or don’t trust our bonds anymore. That is why we need to switch to gold instead. So this is the newest act of charity: borrow from the poor, and help them even more by finding other methods of getting cash from them. This is called “reducing poverty.”

Sad as it is, the IMF knows that gold is valuable. The Chinese know that gold is valuable. The Indians know that gold is valuable, and so does the rest of the world. It is our only asset that has held its value; it is what we turn to as a last resort because we know that gold always has value. Now that you know that too, go to RegalAssets.com to snatch your share of gold before the IMF sells everything and you will be left with worthless dollar bills.f